TPR (Teikoku Piston Ring Co., Ltd.) Business Report FY2008

Business Highlights

Financial Overview (in millions of JPY)
  FY2008 FY2007 Rate of Change (%) Factors
Sales 51,922 58,127 (10.7) -
Operating income 1,818 6,763 (73.1) -
Ordinary income 2,245 7,137 (68.5) -
Current net income 1,103 3,884 (71.6) -
Automotive related product business
Sales 38,422 44,834 (14.3) -Sales of its core products, piston rings, cylinder liners and valve seats, were relatively favorable in the first half. However, sales decreased substantially in the second half as a result of the US and worldwide decline in automobile sales.
Operating income 1,059 5,313 (80.1)

Recent Developments Overseas
-The Company plans to make Federal-Mogul TP Liner Europe Otomotiv Limited Sirketi, its consolidated subsidiary by acquiring additional shares of the company, which is based in Istanbul, Turkey. Federal-Mogul TP Liner Europe Otomotiv Limited Sirketi engages in the manufacturing and sale of automotive cylinder liners. The Company currently holds a 49.9% stake (8,982 shares) in the Turkish entity through its wholly-owned subsidiary Teikoku Europe GmbH. The Company will purchase 18 shares of Federal-Mogul TP Liner Europe Otomotiv Limited Sirketi, for 9,000 Turkish lira, from its joint venture partner Federal-Mogul Investment Limited, to eventually secure a 50.0% stake (9,000 shares). (From a press release on May 9, 2008)

-The Company announced that it will build an additional facility to manufacture cylinder liners in the premises of its subsidiary TPR Vietnam Co., Ltd. (TPRV).

Earnings Forecast for the FY2009 (in millions of JPY)
  FY2008 FY2009 Year-on-Year Decrease (%)
Sales 51,920 42,000 (19.1)
Capital investment 4,650 2,750 (40.9)

Capital Investment Plan (in millions of JPY)
  Rings Liners Others Total Remarks
Japan 850 330 240 1,420 Investment in experiment and research
Overseas 10 1,230 90 1330 Vietnamese base, others
Total 860 1,560 330 2,750  


R&D Expenditure (in millions of JPY)
  FY2008 FY2007 FY2006
Overall 1,871 1,771 1,667

R&D Activities
Automotive product business
-Engine components
1) Piston rings
-Development of super low friction rings (to improve power output and fuel economy)
-Development of thin, highly-functional oil rings (to improve durability)
-To build a production line that achieves reducing the production costs of piston rings (to reduce cost)

2)  Cylinder liners
-Development of super thin, light-weight and highly thermal-conductive liners (to improve power output and fuel economy)

3) Valve seats
-Development of highly abrasion-resistant materials used in valve seats (In response to the use of alternative fuels)

-Other products
1) Aluminum products: Development of new casting method for aluminum wheels used on motorcycles and installing the facilities
to handle them.
2) Sintered mechanical parts: Development of processing method that improves the accuracy and enhance the strength of shock absorb er, and coupling components

Improvement in R&D infrastructure
-Improvement and expansion of facilities for evaluating the function of each part as well as the performance of each part when mounted on engines  
-Working on building a simulation system
-Efforts to develop a support system to assist in developing designs (Piston rings)

Investment Activities